Buoyant agri-economy spurs sharp recovery in domestic tractor market: ICRA
Sep 09, 2020
New Delhi [India], September 9 : The tractor industry is estimated to have recorded 72 per cent growth in wholesale volumes during August and 27 per cent growth in retail volumes on a year-on-year basis, according to the latest research update by investment information agency ICRA.
The lockdown measures undertaken in view of COVID-19 pandemic had hampered tractor industry volumes significantly in March and April.
However, aided by healthy rabi cash flows across regions and progress of monsoon in line with forecasts, there has been a sequential improvement in tractor sales ever since, said ICRA.
Original equipment manufacturers have been ramping up production levels to build inventory ahead of the festive season and are gearing up for healthy sales for rest of the year.
ICRA had, earlier, forecast of 2 to 4 per cent growth in domestic tractor volumes during FY21 led by uncertainty regarding the impact of the pandemic on the farming community. It has now revised growth estimates to 7 to 9 per cent in the current financial year.
While uncertainty continues to exist in relation to the pandemic, farm sentiments are expected to remain healthy aided by healthy farm cash flows across regions and stable crop prices supported by enhancement government focus on procurement.
Besides, there has been healthy monsoon precipitation across regions till date. In addition, there is favourable kharif crop outlook supported by early sowing, seasonally high reservoir levels and adequate labour availability.
On top of it, there have been government support programmes including direct benefit transfers. Adequate financing availability has also been supportive. "Our channel check pegs the percentage of farmers opting for a moratorium to be at low of 10 to 20 per cent."
However, said ICRA, the downside risk emanate from spells of unfavourable rainfall or floods leading to crop damage and supply chain disruption if any.
Still, the credit outlook on the sector remains stable, it added.
